Encouraging shysters to go bust is no way to foster enterprise It was gonna be great. It was gonna be the best thing ever. A day to remember. A red letter day. Mr Conafray had been looking forward to his birthday present for months. At last he was going to fulfil a lifetime's dream and get behind the wheel of something really snortingly fast. Thanks to the generosity of his loving wife and children, he was going to be conveyed to Brands Hatch, attended by every comfort, and installed in a succession of ever more gruntful machines. Jaguars, Astons, AC Cobras, Nobles. Mr Conafray was going to crunch gears, burn rubber and generally kick automotive ass in such a way as to make Jeremy Clarkson look like a 75-year-old nun in a bath chair. His wife had paid £750 for this Red Letter Days birthday experience, and he had every reason to think it would be worth it. When he looked up the website, he found dreamy pictures of balloon flights and cut-glass whisky decanters by roaring fires in sexy locations. There was scuba diving and bungee jumping and paraplaning and cars, cars, cars. According to the blurb, Red Letter Days was "driving the experiences market forward, creating innovative and exciting experiences for everyone". Well, the guys and gals at Red Letter Days certainly cooked up a once-in-a-lifetime package for Mr Conafray. He had the exciting and innovative experience of being suddenly informed, as the day of his Red Letter experience drew closer, that the company was having difficulty meeting its financial obligations. In fact, they were effectively bust, and the only value he would get from his £750 voucher was to use it to light the fire. At which point, we might sadly take our leave of Mr Conafray, reflecting that this is just another Esther Rantzen-ish story of consumer disappointment. Except that there appears to be a further and graver injustice. The "experience" company was set up by one Rachel Elnaugh, 40, who has long been touted as a leading example of female British entrepreneurial flair. Indeed, she is still to be seen on a business management TV show, hosted by the BBC's economics correspondent Evan Davis, in which she dishes out waspish advice to would-be tycoons. She is said to drive a Bentley, and it is reported this week that her entrepreneurial drive is unabated by her recent prang. She has taken a 20 per cent stake in Easyart, an internet art print dealership. As he contemplates her new investments, Mr Conafray can be forgiven a brief spasm of irritation. Or more than irritation. It is flipping outrageous. What is going on? How can someone like Rachel Elnaugh waltz off, and the Conafray family be left £750 down - and they are one of many - to carry on her high-rolling career? Well, one of the joys of being an MP is that you see a lot of people, with a lot of problems, and over the past few months I think I have detected a pattern. First there was the father who came to tell me that his daughter's wedding had been blighted by the way in which the wedding list company had decided to go bust. They chose to do this, conveniently, in the interim between receiving a huge quantity of money from the wedding guests for assorted carriage clocks, toasters etc, and the wedding day itself, so that under the laws of insolvency the presents went back to the suppliers. Then exactly the same thing happened to a girl who works at the Spectator, except with a different firm, and I thought, hah. Some law must have changed, I reckoned, making it easier for firms to go bust and escape their obligations. And so it has. We are now operating under the terms of the Enterprise Act 2002, which was intended to encourage struggling entrepreneurs to press the reset button by using the bankruptcy option. According to the Government, these unfortunates should then be "free to move on to new ventures unencumbered by the stigma and restraints traditionally associated with bankruptcy". The Act, we are told, "aims to make administration more accessible, cheaper and less bureaucratic". And of course the intention is a fine one. The Act is a product of Gordon Brown's longstanding fixation with the US, and his desire to make our economy as vibrant and dynamic as America's. He thinks the problem with us Brits is that we are all too terrified of embarrassment, too frightened of ridicule, too fearful of failure to take the risks necessary for successful capitalism. And he is right. We all wish Britain were more like America, in the sense that people were more willing to take a punt, work hard, and in general have a Chumbawamba-style I-get-knocked-down, I-get-up-again approach to their lives. But there are many ingredients to an enterprise culture, and you can't just create one by removing the penalties for fecklessness. We have much higher taxes in Britain, a much more obtrusive state, and a post-war tendency to think that on the whole events in our lives are not our fault, and that nanny will be there to pick up the pieces, and it is that psychological condition that is reinforced by the new laws on bankruptcy and insolvency. I don't know whether Rachel Elnaugh's experience had anything to do with the Enterprise Act 2002, but most accountants are convinced that the law is partly responsible for the stunning rise in bankruptcies. In the third quarter of this year there were 17,562 individual insolvencies, with bankruptcies rising by 31 per cent and Individual Voluntary Arrangements - where you pay off your debts at a fixed rate - rising by an amazing 95 per cent. Of course much of this may be a function of worsening economic conditions, and excessive household debt, and all the problems for which Gordon will shortly be paying a political price. But it is also clear that by encouraging bankruptcy - literally - the Government is encouraging some people to take the money and run, and to conclude that they are better off being dead than in the red, especially when they can be born again almost immediately, with bankruptcy discharged after only a year. Yes, we need an enterprise culture, but you should bring it about first by reuniting effort and reward, and cutting taxes, not encouraging shysters to go bankrupt at the drop of a hat. I certainly do not say that Rachel Elnaugh is a shyster, but before she makes any further investments morally she should damn well pay back Mr Conafray.